The battle for MAS may be over, but the real war has just started

Real estate investment trust Hyprop walked away from its bid for control of MAS Real Estate almost as soon as it was made, but that doesn't mean that the other bidder, Prime Kapital, will have it easy from now on

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AS Real Estate is the company that nobody expected to become the juiciest mergers and acquisitions story on the JSE this year.

All the ingredients are here: big hitters on either side of the table and a board in the middle that is coming under increasing pressure by the day. And depending on the outcome of the extraordinary general meeting that has been scheduled for 27 August at the request of a group of South African institutional investors, we could see a big hitter like Des de Beer landing up on the board.

But why all this interest and opportunistic dealmaking activity? Why are such impressive sharks circling this particular boat?

Although MAS isn’t a household name, it does have a market cap of R15.6-billion. Despite this significant size, MAS has been struggling to prepare for upcoming bond maturities, flagging weak support in the bond market for companies with its risk profile. This led to the suspension of the MAS dividend in 2023 and subsequent panic selling by dividend-focused investors.

Then, as various other strategies to strengthen the balance sheet came to fruition, investors with more of a net asset value (NAV) or total return focus (versus purely caring about the dividend yield) bought shares, leading to a recovery in the share price to levels seen before the panic selling.